U.S. core consumer prices post biggest gain in 11 months

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WASHINGTON (Reuters) - Underlying U.S. consumer prices recorded their largest increase in 11 months in December amid strong gains in the cost of rental accommodation and healthcare, bolstering expectations that inflation will gain momentum this year.

FILE PHOTO: Vegetables for sale are pictured inside a Whole Foods Market in the Manhattan borough of New York City, New York, U.S. June 16, 2017. REUTERS/Carlo Allegri

The Labor Department said its Consumer Price Index excluding the volatile food and energy components rose 0.3 percent last month also as prices for new motor vehicles, used cars and trucks and motor vehicle insurance increased.

That was the biggest advance in the so-called core CPI since January and followed a 0.1 percent gain in November. Core CPI increased 1.8 percent in the 12 months through December, picking up from 1.7 percent in November. Economists polled by Reuters had forecast core CPI rising 0.2 percent month-on-month and holding steady at 1.7 percent on an annual basis.

Weak import and producer price reports this week had raised concerns about the inflation outlook, although the two reports do not have a strong correlation with the CPI data.

Households also paid more for new motor vehicles, which rose 0.6 percent in price last month, the biggest gain since January. The cost of motor vehicle insurance increased 0.6 percent. Apparel prices, however, fell 0.5 percent.

Cheaper gasoline prices limited the increase in the overall CPI to 0.1 percent in December after climbing 0.4 percent in November. That lowered the year-on-year increase in the CPI to 2.1 percent from 2.2 percent in November.